Global economic growth expected to outperform 2016 both this year and in 2018, but geopolitical developments still pose downside risks. Rising current account imbalances are hindering a powerful recovery.

China’s 6.7% GDP growth was on government’s track in 2016, but lower growth is expected ahead as focus will rely more and more on risk prevention amid excessive credit levels, a housing market bubble, and capital outflows.

Trump’s policy regarding Asia presents a downside risk for APAC’s economy and security situation. If the US increase trade barriers, this is expected to have major implications for the region. Even more so if there would be protectionist retaliations.

China and India have to foster productivity growth in order to avoid getting stuck in the middle income trap. The implementation of an ambitious innovation, education and institutional reform agenda would enable both countries to become the world’s new global growth catalysts.

In this piece, we analyze which region loses most because of the TPP withdrawal by Trump. The US withdrawal has given China, which was excluded from TPP, opportunities to fill a void and to further expand its influence in Asia.